Economic performance

  • Since the 2022-23 Budget, NSW economic growth outcomes have been stronger than expected. The NSW economy has made a solid recovery but faces global headwinds.
  • The strong momentum in the labour market, seen at the time of the 2022-23 Budget, has persisted. The participation rate is close to record highs and the unemployment rate is near its lowest level in almost 50 years.
  • However, the economic growth outlook has been downgraded for 2022-23 to 2024-25 and upgraded in 2025-26. High energy prices, geopolitical uncertainty and the tightening of monetary policy by central banks will continue to impact the global economy. The local economy is experiencing similar pressures as households and businesses face higher costs and the Reserve Bank of Australia (RBA) tightens monetary policy. Overall, real gross state product (GSP) is forecast to average 2½ per cent per annum in the four years to 2025-26, slightly less than the 2¾ per cent per annum forecast at Budget.
  • The labour market is expected to remain tight in the near term even as economic growth slows and migration levels continue to recover. This should support stronger wages growth and help households dealing with cost of living pressures. Over the medium term, the unemployment rate is expected to remain near 4 per cent, broadly consistent with full employment.
  • Supply chain constraints, pressures in the housing construction sector, elevated energy prices and the impacts of severe weather on food prices have contributed to the highest rate of inflation in more than three decades. Inflation is expected to have peaked in the December quarter 2022 and is forecast to ease from here onwards.
  • The outlook is subject to a high degree of uncertainty, including how households and businesses respond to higher interest rates. Additionally, the prospect of a more severe slowing of global growth is a significant downside risk. Inflationary pressures could remain elevated leading to additional monetary policy tightening. Upside risks include more exuberant households keeping household consumption above current forecast levels.

A more detailed economic outlook can be found in the Half Yearly Review.

Economic performance and outlook table (a)







  Outcome Revised Forecasts

Revised Forecasts

Revised Forecasts Revised Forecasts

Real state final demand


5¼ (5½)

1 (1¾)

2½ (2¼)

2¾ (2)

Real gross state product


3¾ (4¼)

1½ (2¾)

2¼ (2½)

2½ (1½)



5½ (3)

¾ (1)

1¼ (1¼)

1 (1)

Unemployment rate (b)


3½ (3¾)

4½ (3½)

4 (3½)

4 (3¾)

Sydney Consumer Price Index


7 (5½)

3½ (3)

2¾ (3)

2½ (2 ¾)

Wage price index


3¾ (3½)

4 (3¼)

3½ (3¼)

3¼ (3¼)

Nominal gross state product


10¼ (9¾)

2¼ (4½)

3¼ (3)

4 (3¼)

Population (c)


1.0 (0.6)

1.2 (1.0)

1.2 (1.1)

1.2 (1.1)

(a) Forecasts are rounded to the nearest quarter point and are annual average per cent change, unless otherwise indicated. Budget forecasts in parenthesis.
(b) June quarter, per cent.
(c) Per cent change through the year to 30 June. Forecasts rounded to nearest 0.1 percentage point.

Note: Commodity prices are assumed to follow Consensus forecasts. The RBA is assumed to increase interest rates further in the first half of 2023, broadly in line with expectations derived from surveys of professional economists and financial market pricing at the time forecasts were completed. The Australian dollar trade-weighted index is assumed to average 64.2 across the forecast period.

Last updated: 02/03/2023